After several small acquisitions, the insurer takes on a New York firm that will boost its revenue 30 percent and widen its market.
After cobbling together the country's ninth-largest independent insurance brokerage through buying dozens of small companies, Brown & Brown Inc. has landed a firm that will increase its revenues by 30 percent.
The general insurer, which has dual headquarters in Tampa and Daytona Beach, said Monday it is buying Rochester, N.Y., brokerage Riedman Corp. in its largest deal yet.
Riedman has 60 offices in 13 states. Twelve of those states are new territory for Brown, expanding its presence in the Southwest and giving it a foothold in markets such as New York, Virginia, South Carolina, Michigan, Wisconsin and Idaho. The sole overlap is in Florida, where Brown is the No. 1 independent with about $90-million in commissions and fees and Riedman does about $11-million in business.
The deal gives Brown & Brown a presence in 23 states and boosts annual revenues from a projected $190-million to $250-million this year, likely moving it up a notch in the national rankings. But company chairman and chief executive J. Hyatt Brown insists girth is not the goal.
"We're not so concerned with how large we are," Brown said in a telephone interview from Riedman's Rochester headquarters. "We're concerned with how much money we make, and this is going to be profitable for both Riedman and us."
Investors embraced the news, pushing Brown shares to a 52-week high of $30.50, up $3.19, or 12 percent.
Terms were not disclosed for the acquisition, which is expected to close in January.
Riedman, which anticipates revenues between $55-million and $58-million this year, will add about 600 employees to Brown's 1,600. Brown spokesman Doug Hudson said "very minimal" layoffs are possible where the companies overlap in Florida.
In the past three years, Brown has completed nearly 50 acquisitions, many of them single-office, mom-and-pop operations. Until now, Brown's biggest deal was its 1993 merger with Poe & Associates, the Tampa firm headed by former Tampa mayor William Poe Sr. That deal contributed $51-million in revenues to Brown and temporarily altered the company's name to Poe & Brown.
The insurer dropped the Poe half of the name last year, but Brown insists there are no plans to phase out the Tampa half of its headquarters, which houses the legal unit among other operations.
Brown predicted more small acquisitions as well as the possibility of larger deals. But he refused to establish specific goals _ or limits. "The goal is ad infinitum," he said.